Plains GP Holdings, L.P. (PAGP): history, ownership, mission, how it works & makes money

A Brief History of PAGP

PAGP, or Plains GP Holdings, L.P., has established itself as a significant player in the midstream energy sector, primarily focusing on crude oil and natural gas liquids (NGL) transportation and storage. As of 2024, the company operates a robust network that connects major oil-producing regions with key demand centers across North America.

Financial Performance Overview

For the three months ended September 30, 2024, PAGP reported a net income of $301 million, an increase from $268 million in the same period of 2023, representing a year-over-year growth of approximately 12%. The net income attributable to PAGP for the nine months ended September 30, 2024, was $953 million, compared to $1.044 billion for the same period in 2023.

Revenue Growth

PAGP's total revenues for the three months ended September 30, 2024, were approximately $12.743 billion, showing an increase from $12.071 billion in Q3 2023. For the nine months ended September 30, 2024, revenues reached $37.671 billion, compared to $36.014 billion in the prior year.

Operational Highlights

PAGP's operational efficiency has been bolstered by strategic investments in infrastructure. The company reported a significant increase in crude oil sales volumes, partially offset by lower commodity prices. The average NYMEX price for crude oil during the third quarter of 2024 was approximately $75 per barrel, down from an average of $82 per barrel in the same quarter of 2023.

Debt and Financial Obligations

As of September 30, 2024, PAGP reported total debt of approximately $7.977 billion, compared to $7.751 billion at the end of 2023. The company issued $650 million in senior notes at a 5.70% interest rate, due in September 2034. This issuance is part of PAGP's strategy to manage its debt maturities effectively.

Dividends and Shareholder Returns

PAGP maintains a strong commitment to returning value to its shareholders. On November 14, 2024, the company will distribute $0.3175 per Class A share, which is consistent with the distribution paid in August 2024. This equates to an annualized distribution of approximately $1.27 per share.

The company has also maintained a robust capital allocation strategy, with total capital expenditures (investment, maintenance, and acquisition) amounting to $629 million for the nine months ended September 30, 2024, down from $749 million for the same period in 2023.

A Who Owns Plains GP Holdings, L.P. (PAGP)

Ownership Structure

As of September 30, 2024, Plains GP Holdings, L.P. (PAGP) owns approximately 85% limited partner interest in Plains AAP L.P. (AAP) through approximately 197.5 million Class A units of AAP. Additionally, PAGP holds a 100% managing member interest in Plains All American GP LLC (GP LLC), which possesses the non-economic general partner interest in AAP.

Investment in Plains All American Pipeline, L.P. (PAA)

AAP directly owns a limited partner interest in Plains All American Pipeline, L.P. (PAA), totaling approximately 232.9 million PAA common units. This represents about 30% of PAA's total outstanding common units and Series A preferred units combined. AAP is also the sole member of PAA GP LLC, which holds the non-economic general partner interest in PAA.

Financial Performance

For the nine months ended September 30, 2024, PAGP reported a net income of $953 million, compared to $1.044 billion for the same period in 2023. The net income attributable to PAGP was $114 million for 2024, down from $146 million in 2023. The basic and diluted net income per Class A share for the nine months ended September 30, 2024, was $0.58, compared to $0.75 for the same period in 2023.

Table of Financial Data

Distributions and Earnings

For the nine months ended September 30, 2024, PAGP made distributions totaling $1.168 billion, with $188 million paid to Class A shareholders and $980 million to noncontrolling interests. In the same period for 2023, distributions were $982 million, with $156 million to Class A shareholders and $826 million to noncontrolling interests.

Debt and Liabilities

As of September 30, 2024, total debt stood at $7.977 billion, compared to $7.751 billion as of December 31, 2023. The breakdown of debt includes $765 million in short-term debt and $7.212 billion in long-term debt. The total current liabilities were reported at $5.126 billion.

Table of Debt and Liabilities

Comprehensive Income

For the nine months ended September 30, 2024, comprehensive income attributable to PAGP was reported at $95 million, compared to $160 million for the same period in 2023. The total comprehensive income for the period was $885 million in 2024, down from $1.094 billion in 2023.

Table of Comprehensive Income

Operational Overview

PAGP's principal source of cash flow is derived from its indirect investment in PAA, which is one of the largest crude oil midstream service providers in North America. The company's operations are primarily focused on crude oil and natural gas liquids (NGL) through extensive pipeline networks and storage facilities.

Plains GP Holdings, L.P. (PAGP) Mission Statement

Overview

Plains GP Holdings, L.P. (PAGP) is dedicated to providing the most reliable and efficient midstream services to the energy sector. The company focuses on the transportation, storage, and distribution of crude oil and natural gas liquids (NGL) across North America.

Core Values

• Integrity: Upholding the highest standards of ethics and compliance in every operation.
• Safety: Prioritizing safety for employees, stakeholders, and the environment.
• Excellence: Striving for operational excellence through innovation and efficiency.
• Community Engagement: Committing to the communities in which they operate through responsible practices.

Financial Performance Metrics

Strategic Goals

• Enhance operational efficiency through technological advancements.
• Expand infrastructure to support growing energy demands.
• Maintain strong financial performance and shareholder value.
• Commit to sustainable practices and reduce environmental impact.

Market Position

PAGP is one of the leading midstream service providers in North America, leveraging a robust network of pipelines and storage facilities. As of September 30, 2024, the company reported total assets amounting to $28,357 million, reflecting its strong market presence.

Debt and Liquidity

Recent Developments

In June 2024, PAGP completed the offering of $650 million in senior notes with a 5.70% interest rate due September 2034, further strengthening its financial position.

Commitment to Stakeholders

PAGP is committed to delivering value to its shareholders while ensuring the safety and sustainability of its operations. The company actively engages with its stakeholders to align its mission with their expectations and needs.

How Plains GP Holdings, L.P. (PAGP) Works

Company Structure and Operations

Plains GP Holdings, L.P. operates primarily through its ownership of a significant limited partner interest in Plains All American Pipeline, L.P. (PAA) and serves as the general partner for PAA. As of September 30, 2024, PAGP owns approximately 85% of the limited partner interests in AAP and 100% of the managing member interests in GP LLC, which holds the non-economic general partner interest in AAP. AAP directly owns a limited partner interest in PAA, representing about 30% of PAA's total outstanding common units.

Financial Performance Overview

For the nine months ended September 30, 2024, Plains GP Holdings reported net income of $953 million, a decrease from $1.044 billion for the same period in 2023. The decline in net income is attributed to various factors, including less favorable results from the NGL segment and increased costs related to the Line 901 incident.

Revenue Breakdown

For the nine months ended September 30, 2024, total revenues reached $37.671 billion, an increase from $36.014 billion in 2023. This growth was primarily driven by higher product sales revenues, which rose from $34.726 billion to $36.321 billion, reflecting increased crude oil sales volumes.

Operational Segments

PAGP operates mainly through two segments: Crude Oil and NGL. For the three months ended September 30, 2024, the Crude Oil segment generated significant revenues and contributed to the overall performance of the company.

Cash Flow and Liquidity

For the nine months ended September 30, 2024, net cash provided by operating activities was $1,758 million, compared to $1,712 million in 2023. The cash was primarily utilized in financing activities, including distributions paid to shareholders and noncontrolling interests.

Debt and Capital Structure

As of September 30, 2024, Plains GP Holdings had total debt of $7,977 million, which includes both short-term and long-term debts. The total debt reflects a slight increase from $7,751 million at the end of 2023.

How Plains GP Holdings, L.P. (PAGP) Makes Money

Business Model Overview

Plains GP Holdings, L.P. (PAGP) primarily generates revenue through its investment in Plains All American Pipeline, L.P. (PAA), focusing on the transportation and storage of crude oil and natural gas liquids (NGL). PAGP holds an approximately 85% limited partner interest in Plains AAP L.P. and operates in the midstream energy sector, which connects producers to consumers through pipeline systems.

Revenue Segments

PAGP's revenue is derived from two main segments:

• Crude Oil
• Natural Gas Liquids (NGL)

Financial Performance

For the nine months ended September 30, 2024, PAGP reported total revenues of $37.671 billion, compared to $36.014 billion for the same period in 2023, reflecting a 4.6% increase year-over-year.

Revenue Sources

Revenue streams are categorized as follows:

• Product Sales: Crude oil sales accounted for $36.321 billion of total revenue.
• Service Revenues: Services provided contributed $1.350 billion in revenues.

Cost Structure

PAGP's cost of revenue includes:

• Purchases and Related Costs: $34.333 billion for the nine months ended September 30, 2024.
• Field Operating Costs: $1.191 billion.
• General and Administrative Expenses: $292 million.

Adjusted EBITDA

The Adjusted EBITDA for PAGP for the nine months ended September 30, 2024, was $2.033 billion, compared to $1.952 billion for the same period in 2023, showing a growth of 4.2%.

Equity Earnings

PAGP recognizes equity earnings from its unconsolidated entities, amounting to $298 million for the nine months ended September 30, 2024, an increase from $277 million in 2023.

Minimum Volume Commitments

As of September 30, 2024, PAGP has minimum volume commitments resulting in future expected revenues:

Commodity Price Management

PAGP utilizes derivatives to hedge against commodity price fluctuations. As of September 30, 2024, PAGP held:

• A net long position in crude oil of 14.1 million barrels.
• A net short position for anticipated sales of 17.2 million barrels of crude oil and NGL inventory.

Cash Flow Analysis

For the nine months ended September 30, 2024, net cash provided by operating activities was $1.758 billion, compared to $1.712 billion in 2023.

Updated on 16 Nov 2024

Resources:

1. Plains GP Holdings, L.P. (PAGP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Plains GP Holdings, L.P. (PAGP)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Plains GP Holdings, L.P. (PAGP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.